The Australian Transport Safety Bureau (ATSB) is Australia's national transport safety investigator. The ATSB's function is to improve safety and public confidence in the aviation, marine and rail modes of transport. The ATSB is Australia's prime agency for the independent investigation of civil aviation, rail and maritime accidents, incidents and safety deficiencies.

The aircraft was approximately 40 minutes into the flight when the pilot noticed a substantial loss of oil pressure. He initiated a diversion to the nearest suitable aerodrome, but several minutes later, following an increase in RPM, the engine failed. A small quantity of oil appeared on the windscreen and the cabin filled with smoke. The propeller continued to windmill during the descent, causing moderate to severe vibration from the rotating engine. A successful wheels-up forced landing was carried out into a cleared area. Inspection of the engine revealed a hole in the top of the crankcase adjacent to and rear of the oil filler neck which was caused by the failure of the number four connecting rod. The screws attaching the oil filler neck flange to the crankcase were found to be excessively loose, allowing a gap between the flange and the crankcase. There were no other apparent oil leaks. The aircraft had undergone a major inspection and top overhaul 108 hours prior to the accident, and had flown 5 hours since the last periodic inspection. There was no reason to remove or loosen the oil filler neck at either of these inspections or during the salvage operation. Before further inspection of the engine could be carried out, it was discovered that the filler neck had been retightened. This caused metal fragments which had been suspended in the oil to become embedded into the gasket material. This confirmed that contaminated oil had exited the engine through this aperture. The pilot stated that he had checked the oil level and the security of the oil cap prior to the flight without noticing any looseness of the filler neck. The oil filler neck may have been loose during the earlier part of the accident flight, but was held in position by the screw threads catching and interfering with the holes in the filler neck flange. The pilot's twisting action on the cap, as well as vibration and crankcase pressure may have caused the filler neck flange to lift off the crankcase, probably with the gap between the flange and crankcase being positioned in such a way that a capillary action was created by the airflow, causing the hot oil to be drawn from the crankcase. The oil then flowed with the cooling air between cylinders number four and five to both the underside and lower left-hand surfaces of the fuselage via the nose wheel well, all of which were thickly coated in oil. There was an insignificant amount of oil, with relatively dry carbon and sludge deposits in the crankcase breather outlet and associated plumbing, indicating that the oil had not escaped from the engine via that route. As the oil level in the engine decreased, oil pressure also decreased, and with insufficient oil flow and pressure to operate the propeller governor, normal rotational loads on the propeller moved the blades towards the fine pitch position increasing the engine RPM. Oil starvation caused overheating of the crankshaft, allowing the babbit alloy of the connecting rod bearings to melt. The number four connecting rod bearing was the first to fail, with separation of the bearing cap allowing the rod to flay about, causing the hole in the top of the crankcase. The small amount of oil thrown onto the windscreen indicated that most of the oil had already escaped from the engine prior to the failure.